Berlin housing market 2016: population growth drives demand

By the end of 2015, Berlin had crossed the 3.5 million resident threshold according to projections. At the same time, gross earnings were rising. Both had a direct impact on the Berlin housing market.

Migration as the main growth driver

According to the Berlin-Brandenburg Statistical Office, the official population figure stood at 3,496,300 in September 2015. In the first nine months of the year, the city grew by 26,400 people, almost entirely through net immigration. The foreign-born population increased by 27,400 to 524,000, while the German-born population declined by roughly 1,000 to about 2,972,000.

Rising wages, more purchasing power

The average gross monthly salary for all employees in Berlin rose by 2.1 percent to 3,074 euros in 2015. The previous year's increase had been 1.8 percent. Since consumer prices fell by 0.1 percent at the same time, Berliners had more money in real terms. Full-time employees earned 3,848 euros per month including bonuses (+4.1 percent). According to the statistics office, wage growth was above average for lower-skilled workers.

Housing demand keeps climbing

More residents and higher purchasing power pushed demand for apartments in Berlin. Studies projected a need for nearly 250,000 new rental apartments and 40,000 additional condominiums by 2030. With a homeownership rate of just 16 percent, Berlin remained Germany's renter capital. Demand far exceeded supply, particularly in boroughs such as Mitte and Neukoelln.

New construction and price outlook

Construction activity was picking up. Since nearly half of new development projects were being built as condominiums, experts expected prices in that segment to stabilize in the medium term. For existing properties, growing investment in energy-efficient refurbishments could dampen price increases. Market trends in the following years showed, however, that demand continued to outpace new supply.